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Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 30,000 units per year. It costs Leaky Pipe $10 to process an order to replenish stock and $1 per unit per year to carry the item in stock. Stock is received 4 working days after an order is placed. No backordering is allowed. Assume 300 working days a year.
a. What is Leaky Pipe's optimal order quantity?
b. What is the optimal number of orders per year?
c. What is the optimal interval (in working days) between orders?
d. What is the demand during the lead time? e. What is the reorder point? f. What is the inventory position immediately after an order has been placed?
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